Key backbencher warns Frydenberg to tread carefully on energy policy

One of key backbench rebels pushing for more coal-friendly policies through the so-called Monash Forum has warned the energy minister, Josh Frydenberg,
to tread carefully on the design of the national energy guarantee.

Craig Kelly, who is the chair of the Turnbull government’s backbench environment and energy committee, told Guardian Australia that Frydenberg only
had party-room sign-off for the broad concepts of the national energy guarantee – not any of the specifics.

Kelly revealed on Tuesday that
he was one of 20 Coalition backbench MPs who had joined the Monash Forum, which is ostensibly aimed at encouraging the government to construct
new coal-fired power stations – but the Liberal says the new ginger group is also about exerting internal influence over the final design of the
national energy guarantee.

Kelly claimed the Coalition party room had not yet agreed to an emissions reduction
target for the electricity sector of between 26% and 28% by 2030 – which is a core feature of the policy that the government regards as settled.

Also up in the air, according to Kelly, is a regulated level of carbon intensity for the electricity market under the new scheme, and a settled trajectory
for any emissions reduction – how fast the mandated pollution cuts come over the decade to 2030.

He said all of those design questions would need to return to the party room for sign-off in the event Frydenberg persuades the states to rubber stamp
the proposed scheme.

While senior frontbenchers, led by the treasurer, Scott Morrison,
have moved to slap down the new coal push before it escalates into a serious proxy war – the outbreak comes at a time when internal sensitivities
within the government are heightened as the prime minister braces for the likely loss next week of 30 Newspolls in a row.

Some government MPs believe the foreign minister Julie Bishop is positioning as a possible leadership contender, although other senior moderates insist
that Malcolm Turnbull’s own faction remains solidly behind the prime minister.

With the coal antics in play and the poll milestone looming, the home affairs minister, Peter Dutton, issued public advice that senior colleagues should
either maintain their loyalty to the prime minister, or vote with their feet. “I believe very strongly that if you don’t have that loyalty, then
you resign from cabinet,” Dutton said.

Tony Abbott will mark the anticipated negative Newspoll with a charity trip through Victoria’s coal communities next week.

On Wednesday night, the former deputy prime minister Barnaby Joyce escalated a public stand-off between the Coalition and AGL Energy by declaring the current owner of the Liddell coal-fired power station in New South Wales wanted to hang on to the ageing asset “to short the market”.

AGL says it has plans for Liddell up until its scheduled mothballing in 2022, but Joyce told the ABC the company was refusing to sell “to put up the
price of power and make more money from fewer assets”.

Joyce’s public accusation echoes what other senior government players are arguing more diplomatically in private, with some suggesting AGL is resisting
selling because it wants less competition in the market in order to boost its own profitability.

The government has intervened over the past few days to encourage the Hong Kong-owned Alinta Energy to make an offer for Liddell to extend the plant’s operating life beyond 2022 to provide system stability before the proposed Snowy Hydro expansion
comes on stream.

Knowing that Alinta has been keen to boost its market share – it recently acquired the Loy Yang B power station in Victoria, and the company is also
close to finalising a $400m investment in the Yandin Wind Farm in Western Australia – the government has encouraged the firm to make an offer.

Frydenberg has declared AGL has “a fiduciary duty to properly consider the offer from Alinta” in the event a formal offer is forthcoming by the end
of this month.

The chairman of Australia’s competition watchdog, Rod Sims, has made it clear that it would be positive for competition in the electricity market if
Alinta acquired Liddell, but he has also confirmed his organisation has no power to intervene in the event AGL refuses to sell on the basis that
it has its own plans for the facility.

Joyce said on Wednesday night he would persist with pursuing coal-friendly policies within the Coalition, but he said the latest backbench-led sortie
wasn’t about increasing pressure on Turnbull’s leadership.

The former Nationals leader predicted the government would lose the looming Newspoll but he said he was “absolutely certain” that Turnbull would win
the next federal election.

Kelly claimed the renewed internal coal push was an effort to back in the prime minister’s policies, but he told Guardian Australia Frydenberg would
face internal resistance if he moved too quickly on the national energy guarantee, which still has to be agreed through the energy ministers council
of Coag.

The Liberal backbencher said Frydenberg had partyroom agreement for the “framework” of the policy, but none of the major parameters.

Asked whether the party room had agreed to an emissions reduction target for electricity, Kelly replied: “I would say no”.

“The overall 26 to 28% reduction is agreed economy wide but there’s been no discussions about what that means for transport, electricity and the agriculture
sector,” he said.

“As far I understand it there has been no discussions about each sector. I don’t think there has been anything through the party room that has talked
about which sector of the economy would bear each proportion of emissions reduction”.

Kelly argues that any emissions reduction for electricity should be loaded towards the second half of the decade to 2030, not at the onset of the policy.